EV pay-per-mile tax (eVED): what 3p a mile really costs you

Pay-per-mile is no longer a rumour. The government announced Electric Vehicle Excise Duty at the 2025 Autumn Budget, ran a consultation that closed in March 2026, and published its response on 13 July 2026 confirming the policy will go ahead. From 1 April 2028, battery electric cars pay 3p for every mile driven, on top of the standard road tax they already pay.

Most coverage has stopped at reporting that. What almost nobody has done is work out what it does to the actual arithmetic of owning an EV. So that is what this is: the confirmed rules first, then the numbers, including one finding that surprised me and one group of drivers who come off much worse than the headlines suggest.

What has actually been confirmed

• 3p per mile for battery electric and hydrogen fuel cell cars.
• 1.5p per mile for plug-in hybrids, on the basis that they already pay fuel duty on the petrol they burn.
• From 1 April 2028, applying to all UK-registered EVs and plug-in hybrid cars. Not just new ones. If you buy an EV tomorrow, it is in scope.
• On top of standard VED, which is £200 a year for most EVs in 2026/27, not instead of it.
• Rising with inflation from 2029/30 onwards, in line with CPI.
• Vans, buses, coaches and HGVs are out of scope at launch, because electrification of those is less advanced.

One caveat worth stating plainly: the primary legislation amending the Vehicle Excise and Registration Act 1994 has not passed yet, and further regulations are needed before the system can operate. The date and the rates are the government's confirmed position rather than settled law. That said, draft legislation is published and the Treasury has budgeted for the revenue, so planning around it changing significantly would be optimistic.

How you will actually pay it

There is no GPS tracker and no black box, which was the fear that dominated the consultation. Instead the system runs on odometer readings.

When you tax your car, you estimate the miles you expect to drive that year and pay eVED upfront, or in instalments, based on that estimate. At the end of the year you submit your actual mileage and the difference is reconciled. Your MOT readings are used as the check. For cars that already have an MOT, the government says there should be no extra step involved beyond declaring the number.

Two practical wrinkles. Miles driven abroad still count, because the odometer does not know where it has been. And if you overpay by more than £100, refunds can be self-certified.

What it costs at your mileage

The arithmetic is not complicated. Multiply your annual miles by 3p.

For context, the Treasury's position is that 3p a mile is roughly half what the average petrol or diesel driver pays in fuel duty, which it puts at around £480 a year. On that comparison EV drivers are still ahead. That framing is fair as far as it goes, but it measures the tax against fuel duty rather than against what EV drivers currently pay, which is nothing.

The bit that surprised me: the tax costs more than the electricity

If you charge at home overnight on a cheap EV tariff at around 7p per kWh, and your car manages 3.5 miles per kWh, your electricity works out at about 2p a mile.

The tax is 3p a mile.

So from April 2028, the government will take roughly one and a half times more per mile than your energy supplier does. The cheaper your tariff and the more efficient your car, the more lopsided that gets. It is a strange outcome for a tax designed to replace fuel duty, where the duty is a fraction of the pump price rather than a multiple of it.

It also means something practical: the usual advice to chase the cheapest overnight rate matters less after 2028 than it does today, because a growing share of your per-mile cost is a fixed tax you cannot shop around for.

The group this genuinely hurts

Here is where the headline numbers hide something important. eVED is a flat 3p regardless of how you charge. That is trivial next to a home tariff and significant next to public rapid charging.

This matters because it lands hardest on people without a driveway. If you can charge at home, eVED is an annoyance that takes a bite out of a large saving. If you cannot, it can push you from marginally ahead to genuinely behind on fuel costs, while you still carry the EV's steeper depreciation and typically higher insurance.

The policy is presented as making EV drivers pay their fair share of road use. The effect is regressive in a specific way: the drivers least able to access cheap charging, often those in flats and terraced housing without off-street parking, are the ones for whom the tax does the most damage to the case for switching.

What it does to the overall EV case

Take a fairly ordinary set of figures. Ten thousand miles a year, a car doing 3.5 miles per kWh, charging mostly overnight so the blended rate works out around 4p a mile, against a 40 MPG petrol car at 17p a mile.

• Fuel advantage before eVED: about 12.9p a mile, or £1,288 a year
• Fuel advantage after eVED: about 9.9p a mile, or £988 a year

So the tax removes roughly 23% of the fuel saving at that mileage. Meaningful, not fatal. The EV is still clearly cheaper to run, and remains so at every home-charging scenario I have modelled.

Where it changes the answer is at the margins, and the margins are where a lot of used EV purchases actually sit. If the depreciation gap between the EV and the petrol car you are comparing already eats most of the running saving, losing another £300 a year can be enough to flip the verdict. That is exactly the kind of case where averages are useless and you need to run your own numbers.

If you are buying now, how much should you care?

Less than the headlines imply, and it depends entirely on how long you keep the car.

Buy this year and sell after three, and you are exposed for a single year. That is £300 on a decision worth thousands, and it should not change your mind on its own. Keep the car for a decade and you are looking at £2,400 in today's money, before the CPI uprating that starts in 2029/30 pushes the rate higher.

There is a second-order effect nobody can size yet. If eVED makes EVs less attractive, used values could soften further, which would show up as depreciation rather than tax. The OBR expects the measure to reduce EV sales by a few hundred thousand over the forecast period, though it also expects increases to the electric car grant to offset most of that. Anyone claiming to know what this does to residuals in 2029 is guessing.

What has not changed

A few things worth keeping in proportion, because the pay-per-mile story has crowded them out:

• Servicing is still much cheaper on an EV. No oil, no timing belt, fewer brake jobs.
• The expensive car supplement threshold for zero-emission cars rose from £40,000 to £50,000 in April 2026, which saves £440 a year for up to five years on cars priced between those figures. That was part of the same package and got far less coverage than the tax.
• Company car benefit-in-kind rates for EVs remain far below petrol equivalents.
• Most clean air zones still exempt zero-emission vehicles.